Canton goes for the gold by reinstating sweepstakes fees

Despite sweepstakes-style video gambling being outlawed in the state, they have slowly crept back in to the corners of gas stations across Western North Carolina in recent months.

To Canton town leaders, that begged the question: if the machines are back, why not bring back the lucrative license fees, too?

Canton has collected $17,000 in business license fees this year from six business that have brought back sweepstakes machines.

Video sweepstakes are back in Waynesville and Sylva, but neither of those towns have reinstated the business license fees.

“You do have a hard time collecting money for an illegal activity,” said Waynesville Mayor Gavin Brown.

But Canton Town Manager Al Matthews said confusion over the machines’ status — are they legal or not? — prompted the town to go ahead and collect.

“I don’t know that they are illegal,” said Canton Town Manager Al Matthews.

The town of Franklin still has its sweepstakes license fees on the books as well. But the town offered a disclaimer about charging the fees. “In doing so, the town of Franklin, nor any of its employees, officers, or officials or agents expresses any opinion as to the legality of any video game operation,” according to Jessie Wilkins, town tax collector.

The state’s video sweepstakes ban was upheld by the N.C. Supreme Court last December. Law enforcement then expunged the region of sweepstakes machines. But they soon cropped back up.

The sweepstakes machine industry claimed a new version of the games were legal, citing various loopholes. Several gas station managers operating the machines in the region were charged by law enforcement but subsequently had their charges dismissed by judges or district attorney. Those district court rulings aren’t precedent setting, however, and don’t mean that sweepstakes are legal.

Still, it has made law enforcement reluctant to waste their time going after video sweepstakes operators. So video sweepstakes machines exist in a purgatory of sorts.

Neither Sylva nor Maggie Valley have put their fees back in place either, but more towns may follow in Canton’s footsteps. Canton was one of the first towns in the region to instate a business license fee for the machines initially, a trend that eventually was adopted wholesale.

The fees were a big source of revenue for towns — Waynesville brought in $98,000 a year.

But when video sweepstakes operations were shut down earlier this year, some establishments complained they had paid the license fee for the year, but then were forced to close their doors.

Maggie Valley has been sent a letter from Vegas in the Valley owners Torry and Jo Pinter asking for their money back. They paid $18,000 in fees last fiscal year but only got to operate for three months.

Meanwhile, the town of Highlands refunded $13,000 in fees after being threatened with a lawsuit by a sweepstakes operator who’d paid up and then had to close.

Canton is in a different boat — it is charging again for machines actively operating. If it does have to hand anything back over, it would be no huge loss.

“It was not a budgeted revenue,” Matthews said. “To reimburse it wouldn’t affect the budget.”